Heli Sissonen
Information sharing in R&D collaboration – Context-dependency and means of governance
Acta Universitatis Lappeenrantaensis 248
Thesis for the degree of Doctor of Science (Economics and Business Administration) to be presented with due permission for the public examination and criticism in the Auditorium of the Student Union House at Lappeenranta University of Technology, Lappeenranta, Finland on the 10th of November, 2006, at noon.
Heli Sissonen
Information sharing in R&D collaboration – Context-dependency and means of governance
Acta Universitatis Lappeenrantaensis 248
Thesis for the degree of Doctor of Science (Economics and Business Administration) to be presented with due permission for the public examination and criticism in the Auditorium of the Student Union House at Lappeenranta University of Technology, Lappeenranta, Finland on the 10th of November, 2006, at noon.
Finland
Reviewers Dr. Sc. (Tech.) Ulla Lehtinen
Department of Industrial Engineering and Management University of Oulu
Finland
Professor, Dr. Sc (Econ.) Hannu Kuusela
Marketing Department
School of Economics and Business Administration University of Tampere
Finland
Opponent Dr. Sc. (Tech.) Ulla Lehtinen
Department of Industrial Engineering and Management University of Oulu
Finland
ISBN 952-214-295-6 ISSN 1456-4491
Lappeenrannan teknillinen yliopisto Digipaino 2006
Finland
Reviewers Dr. Sc. (Tech.) Ulla Lehtinen
Department of Industrial Engineering and Management University of Oulu
Finland
Professor, Dr. Sc (Econ.) Hannu Kuusela
Marketing Department
School of Economics and Business Administration University of Tampere
Finland
Opponent Dr. Sc. (Tech.) Ulla Lehtinen
Department of Industrial Engineering and Management University of Oulu
Finland
ISBN 952-214-295-6 ISSN 1456-4491
Lappeenrannan teknillinen yliopisto Digipaino 2006
INFORMATION SHARING IN R&D COLLABORATION – CONTEXT- DEPENDENCY AND MEANS OF GOVERNANCE
Lappeenranta, 2006 232 p., 9 Appendices
Acta Universitatis Lappeenrantaensis 248 Diss. Lappeenranta University of Technology ISBN 952-214-295-6 ISSN 1456-4491
This study examines the context-dependency of information sharing by evaluating the factors that arise in the business environment and can have an influence on the nature of information sharing, with the means of governing information sharing being highlighted. The study has been conducted as a single case study with three Sub- Cases in the Finnish telecommunication sector.
The work follows the supply management approach. The theoretical background presents the nature of information sharing as a supply networking activity, describes the challenges and risks, brings managerial insights to this context, and results in an a priori framework in which the context-dependency of networking activities can be studied. The findings suggest that there is a need to combine different levels of network research, namely networks, supply chains, dyadic relationships, and companies. Moreover, the framework includes the task and product characteristics. In the end of the theoretical part the a priori framework was utilized when reviewing the existing studies on the context-dependency of information sharing and when categorizing the identified factors according to the elements in the framework.
The empirical research supplements the current understanding of the context- dependency of information sharing in the context of R&D collaboration. The data consists of the focal firm’s perspectives in three R&D programs with three main R&D suppliers. The results indicate that the most influential factors affecting information sharing stem from the nature of the development task given to the supplier. The maturity of the technology, especially in the specific product area, and the capabilities of the suppliers were also regarded significant in the sharing of information. The contextual factors were analyzed in terms of information sharing activity, which in this study was assessed by its content, media and style in different phases of the R&D programs. The results furthermore point out some means that could help in governing information sharing. These means were positioned onto the right coordination level, and supply management and R&D program management levels were distinguished. Finally, an important finding is that despite the challenging
telecommunication business
UDC 65.012.65 : 658.624 : 658.512.2
emotional, practical, theoretical, and financial help from others. It is impossible to name all these people, but it does not mean that I would not appreciate their assistance and contribution in this journey. I started the dissertation process in 2001, but have been doing most of the work for this study since the year 2004. This fact is also reflected in the acknowledgements.
First, my thesis supervisor, Professor Veli-Matti Virolainen has led me to the specific world of Supply Management, and I thank him for being such an encouraging person at times when I felt myself incapable faced with this work. I am also grateful to him since he has made it possible for me to continue this research during different research projects and other vacancies.
The pre-examiners of my thesis, Ulla Lehtinen and Hannu Kuusela, have provided the most valuable comments that helped me in improving the quality of the thesis.
Discussions with a range of colleagues and researchers both in the Technology Business Research Center and in the department of Business Administration have encouraged me to go on despite the downhill that must be confronted every now and then in a research process. Also, the discussions in terms of the different aspects of my work have given me a lot of valuable insights I have kept in mind in course of the project. Special thanks go to Satu Peltola for her comments in the field of Supply Management for her views on the methodological and practical issues concerning the research.
The thesis advisors in the Case Company would serve having their names here, but due to confidentiality I have to express my thanks anonymously to these persons. You have not only provided me an access to the Case Company, but also commented on the content and findings of the whole work. I know this has required extra efforts from you during your busy daily work.
I would not have been able to conduct this thesis without all the financiers. I am indebted to Etelä-Karjalan Kulttuurirahasto, Jenny ja Antti Wihurin säätiö, Kaupallisten ja Teknillisten tieteiden tukisäätiö – KAUTE, Lahja ja Lauri Hotisen rahasto, Lappeenrannan teknillisen yliopiston tukisäätiö, Liikesivistysrahasto, Suomalainen Konkordia-liitto, ja Suomen Akatemia for their financial support.
Minna Vierimaa earns the acknowledgements for proof-reading my English under a very tight schedule.
Words fail me when I try to thank my friends. Thanks for keeping my thoughts sometimes totally out of the thesis.
constant questions on how is my thesis doing. It really motivated me to go on and it is a great feeling to be able to tell him that this work is finally done. I would have liked to share these feelings with my mother-in-law Liisa Sissonen, but unfortunately she passed away during the process. My sister-in-law Salla Sissonen has experienced numerous concerns I have had during this study, and she has had patience to support me and remind me of all the positive things that surround me and which I often forgot during the process. Thanks to everyone!
At last, I come to the most nearest and dearest: my husband Antti, our lovely daughter Jenny and our baby boy Onni. It was challenging to combine the role of a mother, the role of an expecting wife during the most hectic times in the process, and the role of the researcher. But it was also such a relief to get home, to see those lovely faces and forget the thesis for a while. To my love, Antti, I am the most grateful: I can honestly say that this thesis would have never been finalized without your encouragement, your insights and experience in the practical aspects of the thesis, as well as other fruitful discussions we have had around this dissertation and everything else. Not only did you listen and support me, but you kept me on the road! I love you so much.
Lappeenranta, October 17th, 2006
Heli Sissonen
ACKNOWLEDGEMENTS TABLE OF CONTENTS LIST OF FIGURES LIST OF TABLES ABBREVIATIONS
1 INTRODUCTION TO THE STUDY ... 15
1.1 Background to the study ...15
1.2 Research objectives ...18
1.2.1 Research questions ... 19
1.2.2 Research framework ... 21
1.3 Key concepts of the study...24
1.4 Origins of the study ...26
1.5 Structure of the study...30
2 RESEARCH METHODOLOGY ... 34
2.1 Empirical research context ...34
2.2 Research strategy ...38
2.3 Data collection methods and data analysis ...45
2.3.1 Sources of data... 45
2.3.2 Classification and analysis of the data... 49
2.4 Evaluating the scientific research quality ...52
3 MANAGING INFORMATION SHARING AS A NETWORKING ACTIVITY ... 56
3.1 Information sharing as a networking activity ...57
3.1.1 Overview of the past research... 58
3.1.2 Concepts ... 61
3.1.3 Facets of information sharing ... 64
3.1.4 Benefits and key concerns ... 74
3.3.1 Concept of context-dependency... 89
3.3.2 Research traditions in Supply Management... 91
3.3.3 Summary ... 93
4 CONTEXT-DEPENDENCY OF INFORMATION SHARING... 95
4.1 Analyzing networks and relationships ... 95
4.2 Existing models for describing networks and business relationships ... 98
4.3 Towards an a priori framework for analyzing context-dependency ... 103
4.3.1 Elements of context-dependency ... 103
4.3.2 A priori framework for studying context-dependency... 107
4.4 Current understanding of the context-dependency of information sharing .... 111
4.4.1 Previous research ... 112
4.4.2 Summary ... 118
5 EMPIRICAL RESEARCH ... 122
5.1 Introduction to the empirical research setting... 123
5.2 Motivations and risks behind interaction ... 126
5.3 Information sharing... 130
5.3.1 Content ... 130
5.3.2 Media ... 133
5.3.3 Style ... 136
5.3.4 Episodes ... 138
5.4 Context-related factors... 140
5.4.1 Environmental characteristics ... 140
5.4.2 Buyer characteristics ... 142
5.4.3 Supplier characteristics ... 152
5.4.4 Relationship characteristics... 157
5.4.5 Product characteristics ... 159
5.4.6 Task characteristics ... 160
5.5 Success factors and lessons learned in R&D collaboration ... 162
6.1.2 Summary... 173
6.2 Implications of contextual factors on the nature of information sharing...174
6.2.1 Summary of the nature of information sharing... 175
6.2.2 Relation between the contextual factors and the nature of information sharing ... 177
6.2.3 Summary... 181
6.3 Means of governance...182
6.3.1 Means of governance on the level of collaboration management ... 183
6.3.2 Means of governance on the level of R&D program management ... 189
6.3.3 Summary... 192
6.4 Drawing conclusions from the empirical data ...194
7 CONCLUSIONS OF THE STUDY ... 198
7.1 Summary of the research problem and structure of the study ...198
7.2 Theoretical and empirical contribution...200
7.3 Review of the methodology and limitations of the study ...205
7.3.1 Validity and reliability... 206
7.3.2 Limitations of the study ... 209
7.4 Aspects for further research...210
REFERENCES ... 212
APPENDIX 1: LIST OF SECONDARY SOURCES OF INFORMATION ... 233
APPENDIX 2: GENERIC INTERVIEW FRAMEWORK... 234
APPENDIX 3: LIST OF INTERVIEW CODING ... 235
APPENDIX 4: AN EXAMPLE OF INTERVIEW CODING AND DRAWING CONCLUSIONS FROM THE INTERVIEW DATA... 237
APPENDIX 5: EMPIRICAL RESEARCH PROCESS... 241
APPENDIX 6: MAIN SIMILARITIES BETWEEN THE PROGRAMS AND THEIR IMPACT ON INFORMATION SHARING... 242
THREE PROGRAMS AND THEIR IMPACT ON INFORMATION SHARING.. 244 APPENDIX 9: SUMMARIES OF THE SUB-CASES ... 245
Figure 2. Focusing the research during the research process ... 27
Figure 3. Empirical research context ... 37
Figure 4. The abductive research process... 44
Figure 5. Interviewees in the Sub-Cases ... 47
Figure 6. The structure of the theoretical approaches to study context-dependency.. 57
Figure 7. Synthesis of the nature of information and information sharing... 73
Figure 8. Synthesis on the nature of information sharing in the R&D collaboration. 80 Figure 9. Key issues in managing information sharing stemming from the theoretical background ... 87
Figure 10. Levels of research in supply chain management... 96
Figure 11. The key concepts and ARA – a theoretical model ... 97
Figure 12. Taxonomy of factors in buyer–seller interactions... 100
Figure 13. A conceptual framework for understanding the role of communication in business relationships and networks... 102
Figure 14. Supply network variables ... 104
Figure 15. A priori framework for analyzing the context-dependency of networking activities... 109
Figure 16. Revealing the context-dependency and means of governance of information sharing... 121
Figure 17. Phases of the R&D program in the study... 124
Figure 18. Modified framework on the context-dependency of information sharing in R&D collaboration ... 167
Figure 19. The risk/benefit analysis of information sharing ... 184
Table 3. Success factors when facing challenges and risks in information sharing and R&D collaboration... 83 Table 4. Studies on the context-dependency of information sharing and communication... 119 Table 5. Summary of information sharing in the different episodes ... 175
ICT Information and Communication Technology IMP Industrial Marketing and Purchasing
IP Internet Protocol IT Information Technology NDA Non-Disclosure Agreement NPD New Product Development R&D Research and Development RBV Resource-Based View SCM Supply Chain Management TCE Transaction Cost Economics
1 INTRODUCTION TO THE STUDY
This study aims at revealing the context-dependency of information sharing in R&D (research and development) collaboration. To be more precise, information sharing is regarded as an essential networking activity and a tool to manage and coordinate the collaboration taking place in the field of R&D. It is suggested that context- dependency is an important element in responding to this managerial challenge:
activities and management practices are useful only in the right contexts.
R&D collaboration is analyzed here on a dyadic level, and the analysis concentrates on the information sharing activities between the focal company and their R&D suppliers. The purpose of this type of collaboration is to develop new products for customers operating in the telecommunication sector.
This introductory chapter gives an overview of the background to the study and outlines the purpose of the study as well as the research questions, next presenting the research framework briefly. Then, the main concepts of the study are explained.
Finally, the empirical research context is introduced, and the chapter ends with the presentation of the structure of the study.
1.1 Background to the study
Tightening competition and ever-increased efficiency requirements force companies to concentrate on the functions they know best and outsource other functions, or buy them from company networks (Harland, Lamming & Cousins 1999). In this era of networking and collaborative relationships, the management and coordination of these relationships and networks as well as the activities and resources between them become a key issue to gain competitive advantage and operational efficiency.
Nevertheless, there is no doubt how challenging it is to manage different types of
relationships and networks. As a consequence of separation in distance, language and the culture of organization members, communication and cooperation between diverse participants have been recognized as crucial elements to maintain organizational stability and adaptation to change (Peng & Littlejohn 2001).
Many studies in partnership research have shown how critical communication and information sharing between partners is (see e.g. Ellram & Edis 1996; Mohr &
Spekman 1994, 1996; Virolainen 1998). In fact, because of its importance in the business relationships, communication and information sharing have received much attention in the field of Purchasing and Supply Management as a critical partnership success factor. Harland & Knight (2001, 8) contend that to be successfully managed, network level decisions need a close consideration about structural decisions with external partners, confirmation and establishment of interorganizational transparency and openness, and availability of quality data. The organizational setting also requires widely shared information and high quality communication, namely, expertise in communication.
The importance of information sharing has also been recognized in the R&D research (see e.g. Allen 1977; McGinnis 1999; Wynstra, Axelsson & Van Weele 2000). The R&D phase creates specific challenges in information sharing, because the content of information is not always locked at the beginning of the development project, and
“even the customers cannot specify exactly what they want” (Case Company Material 2005a). This means that the development process must be kept open for customer feedback and other change requests coming from other functions or development projects within the focal company. This may result in changes in the requirements and subsequent modifications in the product. (Segelod & Jordan 2004, 250) Another feature of the new product development is the complexity of information to be shared:
future products consist of many elements, which must match each other, and they include a lot of detailed product information (codes, specifications, product features, etc) (Case Company Material 2004).
The study has been implemented in the Finnish telecommunication sector, and in fact, industry-specific factors emphasize the need for studying coordination of supply networks for several reason, as Agrell, Lindroth & Norrman (2004) have noticed.
Firstly, companies are increasingly working against the clock, and the business logic has changed. Secondly, the increased use of outsourcing of manufacturing and R&D to suppliers, shorter product life cycles, and compressed time-to-market have induced changes in coordination mechanisms. Furthermore, because of the demand uncertainty in both the level and timing, the roles and responsibilities in the supply chain are changing, leading to unclear interfaces. There is also strong growth and consolidation among suppliers, leading to shifts in the power balance (Agrell et al.
2004).
All the reasons listed above make both the R&D collaboration and information sharing challenging in the telecommunication sector. In fact, the model of Ragatz, Handfield & Petersen (2002, 392) posits that technological uncertainty impacts the significance of integrative strategies. In other words, high-risk/uncertain technology needs place a greater premium on the tools and techniques of information exchange.
These factors lead to an emphasis on the significance of efficient coordination mechanisms, where smooth information sharing plays a great role. Mohr (1996) is in line with these findings, when contending that the management and control of information is especially crucial for those firms that face an environment characterized by frequent innovation, a high priority on research and development, and where information is time-sensitive. High-technology environments tend to be information intensive, in which both the amount of information is large and the speed of information transmission is fast (Mohr 1996 citing Glazer 1991).
Consequently, when taking into account the challenging fields of collaboration, nature of R&D and the complexity and sensitivity of information, the question of managing information in the right way becomes a key issue in successful R&D collaboration. In this study context-dependency is regarded as an important part in managing the information sharing activity in a network.
1.2 Research objectives
This study aims at analyzing the complex, challenging field of information sharing specific to buyer–supplier relationships in R&D collaboration. The research purpose is formulated in the following way:
To clarify the context-dependency and means of governance of information sharing in R&D collaboration
The context-dependency of information sharing refers to those factors that may influence the ways in which the focal company shares information with their R&D suppliers. Additionally, it is important to recognize how these factors may influence information sharing, and how the focal company can manage information sharing under these circumstances. Context-dependency is taken as a key issue in information sharing, since “information and knowledge are only useful in specific situations”
(Lueg 2001). It is traditionally accepted that a company has to understand their business environment and adapt their operations to that, but it is obvious that when collaborating with other companies an understanding of this context becomes more complicated. Cox (1997) also emphasizes the significance of understanding context- dependency. He states that it is important to comprehend the appropriateness of the suggested solutions through two types of analysis: first of all, to understand why and in which circumstances certain models or tools and processes are applied, and secondly, also to consider which are the appropriate tools to be used in the first place.
In other words, “it is essential that practitioners recognise that what is appropriate in one context may be inappropriate in another” (Cox 1999, 171).
Harland et al. (2001) and Lamming et al. (2000) provide arguments for considering and analyzing the network as an activity environment. In fact, it is important task for researchers in the field of supply chain management to try to classify supply networks into types that share important characteristics; thereby identifying practices of
networking that are appropriate for managing in particular circumstance. Later on, Harland et al. (2004) point out the fact that “little guidance has been provided as to how supply networks of different types facing different business situations can be created and operated effectively.” Section 3.3.1 continues this discussion and thoroughly introduces the concept of context-dependency.
1.2.1 Research questions
In order to clarify the research purpose, the first research question can be posed.
What is the context-dependency of information sharing in R&D collaboration?
This first research question is initially approached in the theoretical part (Chapters 3 and 4), when considering information sharing as a networking activity (Chapter 3) and when considering the different levels and elements in which context-dependency can be studied in the field of Supply Management (Chapter 4). Therefore, one objective of this study is to increase our understanding of information sharing as a networking activity, and to provide a framework to study context-dependency of networking activities purely from the theoretical point of view. Chapter 4 will result in a literature review of the context-dependency of information sharing.
This understanding will be elaborated in the empirical part, when examining if there are other factors influencing information sharing that stem from the R&D collaboration context. R&D activities differ greatly from the manufacturing process, and suppliers differ in the relationship nature, history, and importance, among other things. R&D suppliers in the R&D programs that develop complex products in the telecommunication sector form the basis for analyzing the context-dependency of
information sharing in this study. The R&D suppliers will be further classified according to the capabilities1 required in completing the R&D task.
In terms of evaluating information sharing during R&D collaboration, it is important to identify the business premises that lead companies to pursue information sharing with their partners. This covers the evaluation of motives and risks in information sharing: why a company wants to share confidential, sensitive product and/or business information with their suppliers, and what kinds of risks relate to the sharing of information? This type of analysis makes it easier to understand the nature of information sharing and means of governance. It is also relevant to consider, in which way the context-dependency becomes visible. Since the current research clearly recognizes the importance of information sharing and how inherently extensive information sharing and communication are part of the strategic supplier relationships, it becomes interesting to examine more precisely how the contextual factors influence the content, media, and style of information sharing.
In the second phase, the study aims to answer the question of how the focal company can respond to the context-dependency of information sharing. Now it becomes possible to find out the means that are useful in the managing of information sharing, and the second main research question is thus formed:
Which means of governance are highlighted as a consequence of the context- dependency of information sharing?
When striving towards the governance of information sharing, the evaluation of the success factors applied in R&D collaboration become important. In the context of real-life employees often learn by doing and learning is accumulated only after completing the development task. Therefore, it would also be fruitful to find out those
1 The competence perspective leads to the considerations of the resource-based theory introduced by Penrose (1958), and further developed, e.g., by Barney (1991). The competence perspective gained popularity in 1990, when Prahalad & Hamel (1990) introduced the concept of “core competence.”
lessons learned that are critical in the governance of information sharing. These means are analyzed in the light of context-dependency, expressly, against the circumstances that were found the most challenging and influential in information sharing. Furthermore, in addition to identifying such practices, it is interesting to consider the role of supply management in this. Therefore, the management practices are placed on the right level in terms of the coordinative unit. Practically this means separating the means of governance on the supplier management level which considers the collaboration issues in general, and secondly on the level of R&D program management, which is responsible for the management of the operative work taking place in the R&D programs.
1.2.2 Research framework
In this study the context-dependency of information sharing is explored with an approach on the network research in the field of Supply Management. Actually this study has its roots in three broad research streams: Supply Management, R&D Management, and Information Sharing. In order to avoid the overwhelming literature reviews, the starting point has been in the supply management literature, since it looks at the core of the buyer–supplier relationship, and provides insights into how networks and relationships can be analyzed. It also provides instruments by which to manage these relationships. Additionally, the supply management literature recognizes information sharing (or processing, as expressed by Johnsen et al. 2000) as a networking activity. The theoretical background and reasoning for the study is presented through the theories of Dynamic Capabilities, Resource-Based View of the firm, and Transaction Cost Economics. The following figure clarifies the interrelations between the different concepts of the study, and the theoretical background and relating research streams are marked in italics.
Figure 1. Key research areas
The starting point in the management approach is to focus on understanding and managing the context-dependency. Some of the practices and success factors found useful in the managing of information sharing and collaboration in general are presented in order to increase the relevance of context-dependency, but otherwise this study will not tackle the broad range of issues required in the management studies.
This leads to a couple of significant limitations, and for example the decision-making procedures, organizational issues, and supplier strategies will not be considered in this study. Also, the theoretical frame is used mainly as a background to describe the importance of understanding the capability perspective (Dynamic Capabilities) and information as a resource (Resource-Based View of the firm). Transaction Cost Economics is related both to the context-dependency (features of transactions) and to revealing other restrictions in the governance mechanism (the bounded reality and opportunism).
The review of the literature (see e.g. the literature review provided by Huang, Lau &
Mak 2003) shows that the current understanding of information sharing in the supply management literature is largely concerned with the operational information sharing, gaining efficiency through the usage of information technology. As an example, numerous studies on the usage of information technology are provided e.g. by Baker
TCE RBV DC
R&D collaboration
Supply management perspective to manage information sharing
Context-dependency of information sharing Governance of information sharing Information
processing R&D management
Information sharing as a networking activity
(2000), Curry & Stancich (2000), Hong (2002), Larson & Kulchitsky (2000), Mirani, Moore & Weber (2001), and Ruppel & Harrington (2001), whereas the implications of the use of IT have been studied by Alshawi (2001), Baraldi (2001), Kumar &
Palvia (2001), Morrell & Ezingeard (2002), and Motwani, Madan & Gunasekaran (2000). Another notion is that information sharing is for the most part considered as a success factor of a partnership, or an enabling factor in the R&D, as is reported by Leenders, van Engelen & Kratzer (2003) and Wynstra et al. (2000).
Moreover, previous studies have proved the connection between information sharing and the product complexity on one hand (e.g., Lamming et al. 2000), and between information sharing and business relationships on the other (e.g. Bensaou 1999;
Ellram 1991). The assumption is that the complex product and the strategic nature of the business relationship guarantee a high level of information sharing. It makes the present study more fruitful, since the selection of the Sub-Cases for this study is based on the criteria of a complex product and collaborative relationship. Yet their impacts on the governance of information sharing, as well as the impacts on other influential, context-dependent factors provide an interesting research issue for this study. As pointed out by Lamming et al. (2000, 679), “There is little guidance for firms addressing specific supply-related problems such as choosing the right type of supply network appropriate for particular circumstances or how best to employ network technologies to enable the effective flow of supplies from raw material to end customers.”
The R&D-specific literature has been perused in order to better understand the special features arising from the R&D context, with the information-processing view gaining the least attention in order to avoid a totally new perspective to look at the research problem. Still, some basic concepts and the rationale for the theoretical background of information sharing have been found useful in this study.
1.3 Key concepts of the study
The study is built of two main themes, namely, information sharing and R&D collaboration. However, a wide set of concepts relating to these themes run through the study, and these focal concepts are summarized in the table below.
Table 1. The key concepts of the study
Concept Definition
Information Information is regarded as a resource that the supplier requires during R&D collaboration in order to be able to complete the desired tasks.
Content of information
Technical product information (specifications, standards), program information (schedules, plans), and strategic information (business strategies, business trends). The sharing of marketing (demand data), logistics (inventories) and financial data (product calculations etc) is out of the scope of this study.
Information sharing Information sharing is regarded as formal, one-way action from the focal company to the supplier. Information sharing is a general term that is used throughout the study in order to retain the similarity when using comments.
Interaction Information sharing is regarded as one form of interaction between the focal company and the suppliers. Interaction, when referring to two-way action, is used as a synonym for information sharing especially when meaning a general action in collaboration. The term interaction is used to a larger extent in the theoretical part of the study.
Communication The word communication is widely used to refer to the interaction process between two parties, and like Halinen (1997, 189) explains: “communication refers to both social and information exchange.” That is, communication includes a face-to-face contact, telephone conversation, or other synchronous medium where social interaction cannot be excluded.
Medium/media of information sharing
The means by which information is shared or communicated.
Style of information sharing
Features that characterize the nature of information sharing. It is evaluated through qualitative and quantitative measures.
Episode in the R&D program
A stage or phase in a time frame when R&D collaboration takes place. In this study the R&D program is divided into three episodes: beginning, middle, and end (see also R&D phase).
Context-dependency Interactions and practices take place in specific situations considering all the related factors: context-dependency means something (here information sharing) that is determined by a set of interrelated conditions (here R&D collaboration)
Research and Development (R&D)
R&D refers to the “standard research and development activity devoted to increasing scientific or technical knowledge and the application of that knowledge to the creation of new and improved products and processes.”
(Hagedoorn 2002, 477). This study uses the R&D concept as a separation of the new product development (see the concept of NPD).
R&D phase R&D phase consists of five sequential phases starting from the concept development, followed by system level design, detail design, testing and refinement, and product ramp-up. (Suomala & Jokioinen 2003, citing Ulrich
& Eppinger 1995). For the purpose of this study, the R&D phase is divided into three parts: the beginning, middle, and the end (see also the episodes).
New product development (NPD)
NPD is an essential part of the R&D function (Suomala & Jokioinen 2003), although NPD can also be understood as a broader concept: According to Hart & Baker (1994), the NPD process is a series of interdependent and frequently overlapping activities which transform an idea into a prototype and on to a marketable product. In this study NPD is mostly used in the theoretical part when reviewing the past literature generated in the field.
Supply network According to Harland et al. (2001, 22), “supply networks are nested within wider interorganization networks and consists of interconnected entities whose primary purpose is the procurement, use, and transformation of resources to provide packages of goods and services.” Furthermore, “supply networks encompass the mess and complexity of networks involving lateral links, reverse loops, and two-way exchanges, and include a broad, strategic view of resource acquisition, development, management, and
transformation.” (Harland et al. 2001, 22)
Networking activity Johnsen et al. (1999) define networking “as a transformation process of
‘independent’ actors and resources into a more closely knit configuration of a supply network.” Networking activities, on the other hand, are “concerned with the bonding of actors and the tying of resources” (Johnsen et al. 1999).
In this study information sharing is regarded as a networking activity.
R&D program R&D program is a term used for a large R&D project. The program consists of several projects and sub projects, which can be either R&D or other projects (like quality and documentation projects).
R&D collaboration R&D collaboration is a term used for subcontracting, outsourcing, and other type of cooperation which involves the focal company and such R&D suppliers that have a great role in developing the end product. Intense and strategic cooperation is called collaboration. In each program there is one main R&D supplier, but additionally the network-view forced to lay additional emphasis also on the other players in the network.
Focal company The Case Company, also the buying company. The primary aspect is to consider only one of their Business Areas. The Business Area is divided into three business units, where the R&D programs are located.
R&D supplier One of the main suppliers participating in the R&D program. There are three suppliers involved in the study, one in each Sub-Case.
Governance of information sharing
Governance2 of information sharing was chosen as a concept to refer to the holistic perspective of managing information sharing. It takes into account the required management practices in the supply management, and combines those with the context-dependency of information sharing.
The concepts used in this study are not very coherent in the literature. Especially terms like information, information sharing and communication are conceptualized in
2 Originally the term governance mechanism refers to the “formal contractual structures used to organize the partnerships” (Gulati 1998, 302), which is divided into markets, hierarchies and networks that exist in between. Basically the TCE (transaction cost economics) theory identifies the critical dimensions for characterizing transactions, describes the main governance structures of transactions, and indicates how and why transactions can be matched with institutions in a discriminating way (Williamson 1975). In this study the governance mechanism is not handled as such, because the starting point was to focus on collaborative relationship, where the choice on behalf of the governance mechanism has already been made.
different ways depending on the author, and they overlap in their meanings. Since information sharing is the main concept of the study, in Chapter 3 the concept of information sharing and related terms will be examined in more detail.
1.4 Origins of the study
This study is a consequence of the results of the research project3 conducted in the Case Company of this study and some other companies in the Finnish ICT/telecommunication sector. As will be explained, this project has served as a starting point for the present study both in terms of the theoretical background and insights (context-dependency), and in terms of the empirical research context. The research project will be introduced rather carefully because it had a significant role in increasing my preunderstanding of the phenomenon studied here.
According to Gummesson (2000, 57), researchers should award more consideration to the significance of this so-called preunderstanding when choosing the scientific approach and methods. Gummesson defines preunderstanding as things such as people’s knowledge, insights, and experience before they engage in a research program.
The following figure illustrates the focusing of the research topic and the empirical case in this wide research context. The topic was developed and sharpened from the research project as of 2001 until the year 2005, when the study was refined and the interviews were conducted.
3 The project “Information Technology in Business Relationships” was conducted in 2001–2003 in cooperation with the Lappeenranta University of Technology/Technology Business Research Center, University of Jyväskylä and Timo Kivistö Consulting Oy, as well as with companies operating in the information and communication technology industry. The main financing organization of the project was the Finnish Funding Agency for Technology and Innovation.
Figure 2. Focusing the research during the research process
The purpose of the research project was originally to study the management of supply networks from the communication perspective on one hand, and the use and implementation of information systems on the other. During the first year of the project I gained an understanding of the general communication features: the media in information exchange, and its facets (frequency, directionality, adequacy), as well as the content of communication in two ICT supply networks. The study was conducted as an Internet survey with 13 companies (two focal companies and their 1st to 3rd tier suppliers), and 82 respondents gave an overview of the general communication linkages between the companies in each supply chain studied (four supply chains in the supply network of one focal company and one supply chain of another one’s).
In 2002 the project researchers were introduced to one specific form of information sharing: sharing of product data during the delivery operations in one of the project’s case companies (the Case Company of the present study). Performing 32 semi-
during the R&D phase with the key suppliers
Year 2001
2002
Introduction to the ICT sector (2 focal companies and 11 suppliers)
company and its two business areas
RESEARCH ISSUE RESEARCH CONTEXT
General communication facets in the supply network
Communicating product data in the supply network
Sharing of information
Year 2001
2002
2005
Introduction to the ICT sector (2 focal companies and 11 suppliers)
Focusing on one focal
Focusing on one business area and its
three business units
RESEARCH ISSUE RESEARCH CONTEXT
structured interviews in June–October 2002 in the Case Company (in two of their Business Areas) and in four of their suppliers revealed, among other things, a couple of fundamental factors when implementing information systems and new inter- company procedures within the supply network. The most important notion was that the management of product data was not only about managing the operational information flows, but also about tackling the issues of ICT business and its characteristics, the sourcing strategy and partner management, and above all, strategic issues within information sharing, like the governance of information. The interviewees also discussed about the roles of product programs (the R&D projects) as a source of product data. It was concluded that there are several challenges in product information management already in the product program phase. For example,
“the early involvement of the sourcing organization and suppliers will become more important in the future but that at the moment it includes uncertainties such as information security and technology leaks” (Huhtinen et al. 2003, 72).
The results of the research project exposed the challenging field of information sharing in the supply network. The importance of product programs in providing product information is also critical, as well as the roles of the sourcing organization and supply management.
The exploratory research conducted in 2002 also revealed some different views and expectations of the communication platform in two independent Business Areas. The context-dependency of information sharing became evident during the interviews, even though the issue was not raised in the questions: based on different types of products and production processes, the structure of the supply networks and hence the management practices of the suppliers were different between the Business Areas.
Consequently, the drivers for implementing a common communication platform for managing product data were also inconsistent between the Business Areas. As a result it became interesting to find out in more detail which organizational (involving suppliers) factors may have an influence on the sharing of information. These
findings provided assurance to study this context-dependency of information sharing more in depth.
Based on those many challenges of sharing information during the manufacturing process, the following question was raised: “What is information sharing like in the earlier phases of buyer–supplier collaboration, where information might be more unspecified, more sensitive, and secure in its nature?” The increased risk of sharing information in the early phases of R&D highlights the need for evaluating the drivers and objectives to share information, and these drivers definitely differ from those identified in the manufacturing process.
This exploratory research project focused only on one way in which to govern the sharing of information in the supply network. The research focused on a certain extranet solution to be used with the selected suppliers. However, after identifying the many elements that have an influence on information sharing, the study of the governance mode without any pre-assumptions (e.g., a generic database) gained the research interest.
Moreover, an understanding of the telecommunication business and its trends and challenges as well as the Case Company’s overall business logic when collaborating with suppliers proved to be useful when performing the interviews in 2005: through this preunderstanding it was easier to create a clear picture of the collaboration in the Case Company, with these prior experiences affecting the implementation of this study. All in all, the research project generated an understanding of how complicated and large an issue information sharing is in Supply Management, and it became intriguing to study the phenomenon more deeply. Although none of the empirical data stemming from the project will be presented in this study, its role is regarded as an important element in the whole research process. This issue will be returned to in Section 2.2, when presenting the research strategy of the study, and its abductive research approach.
1.5 Structure of the study
This chapter has introduced the background and purpose of the thesis as well as the research questions with an illustration of the research framework. Also, the main concepts of the study have been explained, and the origins of the empirical research have been clarified. Finally, the chapter concludes with an outline of the structure of the study (see Figure 3).
Figure 3. Structure of the study
Chapter 3: Information sharing as a networking activity
- Nature of information sharing
- Insights into the management approaches of information sharing
Chapter 4: Context-dependency of information sharing
- Network analysis
- A priori model for analyzing the context-dependency of networking activities
- Review of context-dependency of information sharing
Chapter 7: Conclusions of the study
- Summary of the research purpose and summary of the study - Key theoretical and empirical findings and contribution - Review of the methodology and weaknesses of the study - Suggestions for further research
Chapter 2: Research methodology
- Empirical research context - Research strategy
- Data collection methods and data analysis - Scientific quality of the research
Chapter 1: Introduction
- Background to the study
- Research purpose and research questions - Research framework
- Concepts of the study
- Introduction to the empirical research - Structure of the study
Chapter 6: Research synthesis
- A modified framework of factors affecting information sharing - Implications of contextual factors on the nature of information sharing - Means to govern information sharing
- Drawing conclusions from the empirical data
Chapter 5: Empirical research context and findings
- Introduction to the case
- Motives and risks of R&D collaboration - Nature of information sharing
- Case context and general implications on information sharing
The second chapter presents the research methodology, including the empirical research context and selection of the case and the Sub-Cases, considerations on research strategy, data collection methods, and evaluation of the research quality.
The third chapter concentrates on information sharing as a networking activity. The chapter first introduces a conceptual analysis of information and the related concepts.
The nature of information sharing will be illustrated by presenting the facets of information sharing, namely, content, media, and style. Also, the main benefits, challenges and risks that are normally combined with information sharing in the network are introduced. The chapter ends in describing managerial challenges arisen in the sharing of information and collaboration in general. This includes the theoretical standpoints as well as an introduction to the supply management perspective in information sharing.
The fourth chapter is built on revealing the context-dependency of information sharing. First, an introduction to the general network analysis takes place. After that an a priori framework for studying the context-dependency of networking activities is proposed, followed by a literature review on the context-dependency of information sharing which is done by utilizing the framework just generated.
The fifth chapter introduces the results derived from the case study. This chapter is partly descriptive in its nature, and partly interpretative especially when revealing the relation between the nature of information sharing and the surrounding business environment. An introduction to the case, as well as motives and risks in R&D collaboration are first revealed, so that the reader gets familiar with the case context and challenges that the Case Company faces in today’s business. Then, the elements of interaction as they appear in the a priori framework are presented in the case context: the nature of information sharing and the factors arising in the case environment. Finally, the success factors in information sharing and in R&D collaboration are presented.
The sixth chapter provides the research synthesis with a closer analysis of the context-dependency of information sharing with theoretical insights, and additionally, these views are complemented by highlighting such means of governance that could be regarded of importance due to the context-dependency. In the end of this chapter it is discussed how to draw conclusions from the empirical data and what kind of challenges are relating to the analysis.
Finally, the conclusions of the study summarize the main findings and contribution of the study. The scientific quality and the main weaknesses will also be evaluated, and some ideas for further research will be proposed.
2 RESEARCH METHODOLOGY
This chapter presents the empirical research context and gives an overview of the research strategy, data collection methods, and evaluation of the research quality.
2.1 Empirical research context
This study is a qualitative, mainly descriptive case study in its nature, where the empirical evidence has been collected in a Finnish ICT company. Palmberg &
Martikainen (2003, 1) contend the following when arguing for using the ICT sector as a case industry: ”The limitation of the ICT sector is motivated by the strong international position that Finland has had in this sector since the mid 1990s. The ICT sector is also especially interesting from the viewpoint of strategic R&D alliances due to the systematic nature of the innovation.” Moreover, “digitalization of networks and the emergence of the Internet are blurring technology and industry boundaries, deconstructing value chains and reshaping business models” (Paija, Rönkkö &
Steinbock 2001). These views provide arguments for why to conduct the study in the Finnish ICT sector.
Selection of the Case Company
The research context was determined to be the ICT sector from the very beginning of the research project, started in 2001, and the Case Company (or one of their Business Areas) was involved from that time on. The decision concerning the selection of only one focal company within this thesis was based on the results of the exploratory study in 2002 as was pointed out in Section 1.4.
Along the study this Case Company will also be called the focal company for the following reasons: 1) the focal company is the only firm with direct ties to every other firm in the network, and 2) as the nodal firm, the focal company not only has
direct ties with each supplier, but also has some economic interdependence with each supplier. The next chapter explains more thoroughly the criteria for selecting the Sub- Cases from the Case Company.
Selection of the Sub-Cases
In the empirical part three R&D programs, known also as Sub-Cases, represent the units of analysis. Each R&D program was selected together with the business unit collaboration manager or the relationship manager. The R&D programs of this study have been selected so that each Sub-Case represents one business unit within the selected Business Area of the focal company. Sub-Case 2 is an exception, because the organization in question is actually a business line within the real Business Unit 2.
However, in practice and due to the history, the business line could be called a business unit like the other two business units.
In addition to being part of different business units, the selected programs vary in the nature of the product. In fact, the formation of the business units is based on producing different types of products. All the R&D programs selected for the study and the products being developed within these are complex and highly innovative technologically. The reason for this kind of scope was to show that R&D collaboration includes extensive information sharing. The product is being developed in the R&D organization as a distinction to the sourcing unit’s R&D4. Another feature of the product is that they could be either hardware (Sub-Case 3) or software (Sub- Cases 1 and 2).
Another selection criterion of the Sub-Cases was the time of the R&D program: each R&D program was finished less than a year before the beginning of the interviews except the one program that was not yet finished at the time of the interviews5. This
4 These products are usually called black box products
5 However, the work-in-progress of this program did not have an influence on the analyzed factors, since the R&D supplier’s involvement ended in June 2005, and in this sense it was possible to follow the program till the end.
way it was possible to avoid memory retrieval problems, and the persons involved in the programs were easier to catch for the interviews. Moreover, a further selection criterion of the Sub-Case was that the R&D program should be typical, meaning that each Sub-Case provided a prototype of a certain class of R&D programs. The intention was also to avoid rare cases.
Finally, the last criterion in the Sub-Case selection related to the capability of the R&D supplier involved in the program: in one program the R&D supplier had the capability to develop the product already before the program began; in the other program both the program and the R&D supplier had this capability (the capability had been increased step by step), and in the third program the product was new to both parties in the beginning of the program. The selection of the R&D suppliers was actually an easy one, since there were typically only few R&D suppliers in each program.
To summarize, the following figure illustrates the Case Company, the three Sub- Cases, and different parties involved in the study.
Figure 3. Empirical research context
The figure above illustrates the linkages between the focal company and their supplier network, the Sub-Cases selected for the study, as well as the R&D suppliers involved in the study. Other R&D suppliers and other suppliers may be common or divergent: for example, the documentation suppliers are common to all business units. On the other hand, in Sub-Case 3 the supplier base differs from the other Business Units mainly due to the distinctive feature of the product (a hardware product instead of a software product).
The network perspective is regarded as a starting point in the study, although the interviews regard collaboration only between two parties (thus, on the relationship level). The network perspective is important, because the actions of the other parties in the network also have an influence on the specific relationships, and vice versa:
actions in one collaborative relationship influence the other parties of the network.
Case Company Business Area X
R&D supplier 1
Other R&D suppliers
Internal network
= Case Company, focal company
External network = Supplier base BU
Sub-Case 1
R&D supplier 2
R&D supplier 3
BU2/BL1 BU3
Sub-Case = R&D program
Other suppliers
Supply network=internal and external network together with other players (competitors, customers, other suppliers)
Sub-Case 2 Sub-Case 3
However, there are some challenges relating to this kind of research approach. First, the supply networks may consist of hundreds of companies, which make it impractical to involve most network players in the research. Second, the identification of objective network boundaries is theoretically problematic, making it difficult to distinguish who is in and out of the network. As contended by Harland et al. (2004, 2), “the analyst, depending on the focus of investigation, can determine the boundaries of a supply network”. In other words, we could examine a supply network for a firm that could be represented by the set of upstream or downstream organizations it deals with. According to Harland et al. (2004, 2), “this would provide a map of all relationships within that firm’s supply network.” Furthermore, as Harland (1996) explains, the activities in the dyads are displayed in networks, and thus, the dyadic relationships also provide a basis to study networks. In this thesis, the focus is thus limited to a small number of key actors (business units 1–3 and R&D suppliers 1–3 in three R&D programs), creating three sub-networks as a proxy for the total R&D network.
After defining the case as well as the Sub-Cases, there is a need to explain more thoroughly the linkage between the context and the case, and what they mean within this particular study. As explained by Eriksson and Koistinen (2005, 7), context consists of those actors and actions, where the selected case is closely related. That is, the case is a smaller part of the whole context. According to Pettigrew (1997, 340),
“social processes are deeply embedded in the contexts that produce and are produced by them.” Within this study this means the recognition of the contextual factors that have an influence on information sharing.
2.2 Research strategy
The research strategy includes considerations on the type and nature of the research, research methods, and unit of analysis. This section begins with an argumentation for
the case study, after which the unit of analysis will be presented. Finally, the research method (abduction) will be described.
Case study
This study aims to find a solution for the needs of the Case Company, which will be accomplished by asking questions “why” and “how,” with the purpose of qualitative research being to provide a more extensive understanding of the studied phenomenon.
One type of study in qualitative research is the case study, which has been defined for instance by Yin (1994, 3) in the following way: “A case study is an empirical inquiry that investigates a contemporary phenomenon within its real life context; when the boundaries between phenomenon and context are not evident; and in which multiple sources of evidence are used.” Additionally, the extent of control over behavioral events may lead to a case study. (Yin 1994) This means that the case study is preferred in examining contemporary events, but under a specific condition: when the relevant behaviors cannot be manipulated.
The main argument for the case study research method here is that the research problem is very complex in its nature: it includes many variables and concepts which are not easy to grasp with a quantitative study, for example. Furthermore, because the empirical research context is a contemporary event, it leads to multiple sources of evidence, like interviews, introductory and informative sessions with the research advisors in the Case Company, and using of company-specific documentation. Also, the unit of analysis in the research is very complex, and certain variables stemming from the R&D collaboration context cannot be easily excluded: this means that it is impossible to carry out any experimental research.
Finally, there are some other advantages in the qualitative research, which makes collecting data and drawing conclusions easier along the study: flexibility, richness in nature, holism, assessment of causalities, possibility to locate meanings, and natural setting of the context, among others. (Miles & Huberman 1994)
When conducting the literature review, the Author performed an extensive desk study. In this sense the research was conceptual in its nature, although the existing theory was also developed further and a new framework was built. The framework was mainly postulated from the supply management perspective. The fields of Knowledge Management, Organization Theory could have provided interesting insights in the research problem, but these were intentionally left out of the focus.
Expressly, the study aims to increase current understanding in the field of Supply Management.
The origins of the empirical research to a large extent leaned on the research project, and the research interest as well as the preliminary theoretical frames originated from that project. Therefore, the research project was a sort of a pilot study, an exploratory research, which was used as a basis for formulating more precise research questions.
(Gummesson 2000, 85) However, for the most part this present study is a descriptive case study. According to Yin (2003), the aim of a descriptive case study is to describe an intervention and a real-life context in which it has occurred. Gummesson (2000) reminds us of the beliefs that description is considered less prestigious in scientific circles, meaning that description is mere observation, reporting, and summarizing other people’s opinions. Still, as Gummesson (2000, 85) points out, “in making descriptions, we have to make choices, and these choices are guided by our paradigm, access, and preunderstanding. There is no description without analysis and interpretation.” To sum up, this kind of research approach requires a deep understanding of the case context: why is information sharing as it is, and more particularly, which contexts influence information sharing? Therefore, it is well- reasoned to describe thoroughly both the case context and the nature of information sharing. This work is done especially in Chapter 5, whereas the Author’s interpretation and analysis will be presented in Chapter 6.
Unit of analysis
The definition of the unit of analysis is an important phase in the research design, since it is related to the way the initial research questions have been defined (Yin
1994). Also, the unit of analysis may be either holistic or embedded: the former refers to one unit of analysis, whereas in the latter the attention is also paid to the sub- unit(s) of the case. In this study each R&D program is considered a unit of analysis.
Therefore, this single case is analyzed in an embedded way. To be more precise, three R&D programs of the Case Company’s Business Area X are under examination and they are called Sub-Cases. Accordingly, this study is an embedded single case study with multiple items.
An argumentation for using three R&D programs of three business units as Sub- Cases is provided in the study by Jordan & Tricker (1995). According to the authors, the decentralization of business units has enabled the units to pursue strategies that are almost independent, to such an extent that the business units can be regarded as distinct entities within a set of overall organizational constraints. The business units also contain considerable diversity in terms of products and a rich variety of structures and business strategies, and provide unique opportunities for studying them separately.
Since the perspective of analysis is the focal company and how it perceives information sharing in R&D collaboration, the case study is defined as a single case instead of multiple case studies, in spite of the three separate Sub-Cases. This decision is based on the argument that since the focal company is the same in each R&D network, there are similarities in strategic decisions, organization, and company culture. Another significant limitation concerning the research perspective deals with focusing on the focal company interviews only. This is partly a question of resources:
the number of interviews is limited as the main source of data, and it was found more important to focus on an in-depth understanding of the focal company perceptions in governing information sharing. To be more precise, since the focal company is the key actor in the governance, its perspective becomes emphasized.
Still, there is no denying the importance of also considering the perceptions of the suppliers: their opinions would have provided valuable information into which
